Air Canada asking court for bankruptcy-protection from creditors ALLAN SWIFT Canadian Press Tuesday, April 01, 2003 MONTREAL (CP) - Debt-laden Air Canada announced Tuesday it has asked an Ontario court for bankruptcy-protection, which would allow the struggling airline to keep operating while negotiating a long-term survival plan with employees, creditors and other stakeholders. "Air Canada is determined to do all in its power to restructure itself through this process and emerge as a world-class competitive and profitable airline," Robert Peterson, the carrier's chief financial officer, said in a sworn affidavit to the Ontario Superior Court of Justice. In its bankruptcy protection filing in Toronto, Air Canada revealed it had secured $700 million US in debtor in possession financing to keep the airline operating while it restructures. For customers and the travelling public, it will be business as usual while the court process goes on over the next several months, the Montreal carrier said. "I firmly believe Air Canada has an exciting future ahead of it and will continue to lead its peers in establishing a stable and profitable network carrier servicing Canadians and the world in the new low-cost competitive environment," Peterson said. "It has become clear that the model on which the traditional network carrier business is based is broken." The announcement, one day after two major unions said they accepted a total of 2,300 job cuts affecting their members, as part of a 3,600-employee downsizing announced by Air Canada president and chief executive Robert Milton on March 20. The bankruptcy-court filing had been anticipated by industry observers as the war in Iraq compounded already deep financial problems due to intense domestic competition, rising costs and a weakening economy. As of Dec. 31, Air Canada owed about $12.9 billion in long-term debt and leases. It also lost $428 million last year, bringing the total to more than than $1.7 billion since its last profitable year in 1999. At the end of last year, the airline had $604 million in cash, cash equivalents and committed financing. However, analysts have said Air Canada's cash resources have likely dwindled substantially in the first three months of this year - a tough period for all airlines, particularly those with international routes - and probably won't be enough to meet its needs. By filing under the Companies Creditors Arrangement Act - a federal law that's roughly similar to a Chapter 11 filing under the U.S. bankruptcy code - the company hopes to work out new deals with its various creditors, unions and other stakeholders. On Monday, Transport Minister David Collenette said he won't provide a cash bailout for Air Canada. But Collenette has also said the federal government is committed to the survival of Canada's largest airline in some form or another. One possibility would be hundreds of millions of dollars in loan guarantees. In that situation, Air Canada would borrow money from some other source, with the assurances that Ottawa would guarantee the repayment of the loan of Air Canada cannot. Such an offer was made by Collenette in late 2001 to Canada 3000, after the Sept. 11 terrorist hijackings in the United States resulted in a staggering drop in passenger traffic. However, Collenette also attached strict conditions that Canada 3000 was unable to meet. The Toronto-based airline, at the time Canada's second-largest, abruptly stopped flying in November 2001. *************************************************** The owner of Roger's Trinbago Site/TnTisland.com Roj (Roger James) escape email mailto:ejames@xxxxxxxxx Trinbago site: www.tntisland.com Carib Brass Ctn site www.tntisland.com/caribbeanbrassconnection/ Steel Expressions www.mts.net/~ejames/se/ Site of the Week:http://www.ttsailing.org/ TnT Webdirectory: http://search.co.tt *********************************************************